Technology share prices recovered from last week’s sharp declines on Monday, although the rebound was tempered by a significant drop in Nvidia following a board probe into CEO Jensen Huang over allegations involving a Chinese spy. While Wall Street’s main indices opened higher, Nvidia shares slumped more than eight percent as trading began in New York, marking a stark contrast to the broader market sentiment.
The broader tech sector had taken a hit in the days following last Tuesday’s US midterm elections, where Democrats secured control of both chambers of Congress. This political shift fueled speculation that lawmakers would move to rein in major technology firms. However, the Philadelphia Semiconductor Index, which tracks major chipmakers and AI companies, rose 1.9 percent on Monday, indicating a return of investor confidence in the artificial intelligence trade.
Patrick O’Hare, an analyst at Briefing.com, noted that the equity rebound was driven by more than just falling oil prices. “What we also have this morning is an inclination to buy into last week’s weakness, and specifically into the large losses seen in the AI trade,” O’Hare said. He added that investors are currently treating the Nvidia situation as a one-off story, with the market not yet convinced that the scandal will have a systemic domino effect on the broader sector.
The uncertainty surrounding Nvidia stems from reports that the company’s board is investigating whether Huang was targeted in a foreign espionage plot. This inquiry follows Huang’s admission that he was unfaithful to his wife. The New York Times previously reported that US intelligence officials concluded that Alice Huang, a Chinese executive linked to a Singapore-based data center company, had been funneling information to Beijing. Alice Huang, also known as Huang Le, is not related to Jensen Huang, the 63-year-old Taiwanese-born Nvidia CEO, but had developed a close relationship with him.
In a message to employees released on Sunday, Jensen Huang acknowledged the affair and apologized to his family and staff. Dan Ives, a technology analyst at Yorkville Ives, warned that the crisis would likely spark congressional inquiries and create an “overhang on the stock.” Ives stated that the situation adds risk to Nvidia’s valuation given Huang’s central role in the company’s global strategy and will increase scrutiny on chip sales to China, a key political issue in Washington. In response, China described the claims of espionage against Huang as “baseless” on Monday.
Oil prices also fell significantly on Monday, with Brent North Sea crude dropping 5.5 percent to $92.90 per barrel and West Texas Intermediate falling 4.9 percent to $86.34 per barrel. The decline in energy costs was attributed to hopes for diplomatic talks aimed at ending the US-Iran war. In currency markets, the dollar weakened against its main rivals, with the euro rising to $1.1197 and the pound climbing to $1.3416.
Global markets showed mixed but generally positive trends in afternoon trading. In New York, the Dow Jones Industrial Average rose 1.1 percent to 51,858.65 points, while the S&P 500 gained 0.8 percent to 7,438.80 and the Nasdaq Composite added 0.9 percent to 24,792.85. European markets also posted gains, with the London FTSE 100 up 0.7 percent, the Paris CAC 40 up 1.1 percent, and the Frankfurt DAX up 1.2 percent. Asian markets were mixed, with the Tokyo Nikkei 225 closing up 2.3 percent, while the Seoul Kospi and Hong Kong Hang Seng Index both ended lower.
<small>Source: Vanguard News — read the original story there.</small>
